perma-model

What Is PERMA Model? The PERMA Model In A Nutshell

The PERMA model was created by American psychologist and educator Martin Seligman. The PERMA model is a framework for happiness and well-being based on positive psychology through five elements: positive emotion, engagement, positive relationships, meaning, and accomplishment.

PERMA ModelKey ElementsAnalysisImplicationsApplicationsExamples
DefinitionThe PERMA Model is a well-being theory developed by psychologist Martin Seligman, focusing on five key elements that contribute to overall happiness and well-being: Positive Emotions, Engagement, Relationships, Meaning, and Accomplishment.Analyzing the PERMA Model involves understanding and applying its five elements to assess and enhance personal or organizational well-being. It provides a framework for evaluating different aspects of life and work that contribute to happiness.The PERMA Model suggests that achieving a balance in these five elements can lead to greater well-being and life satisfaction. Understanding these components helps individuals and organizations prioritize actions and interventions that promote happiness and fulfillment.The PERMA Model is widely applied in psychology, education, workplace well-being programs, and personal development. It can guide individuals, educators, therapists, and leaders in fostering well-being and positive mental health.– Implementing well-being programs in workplaces to enhance employee satisfaction, engagement, and productivity. – Designing educational curricula that incorporate elements of well-being to support students’ emotional and psychological growth. – Personal development and self-improvement efforts to achieve a more fulfilling and balanced life. – Assessing and enhancing the quality of relationships and connections within a community or organization.
Positive EmotionsPositive Emotions involve experiencing feelings of joy, gratitude, love, and other positive affective states. These emotions contribute to a sense of happiness and life satisfaction.Analyzing Positive Emotions includes recognizing and cultivating moments of joy, gratitude, and happiness in daily life. Fostering positivity through activities like gratitude journaling or acts of kindness can improve overall well-being.Embracing positive emotions can enhance one’s overall mood and outlook on life. They serve as a buffer against stress and negative emotions, contributing to resilience and improved mental health.Encouraging individuals to savor positive moments, engage in activities that bring joy, and practice gratitude as part of well-being initiatives.– Practicing daily gratitude by keeping a gratitude journal and reflecting on things to be thankful for. – Engaging in activities that bring joy and happiness, such as hobbies, spending time with loved ones, or pursuing passions. – Implementing workplace practices that acknowledge and celebrate achievements and positive contributions to boost employee morale. – Teaching students emotional regulation techniques to manage stress and cultivate positive emotions in the classroom.
EngagementEngagement refers to the state of flow or being fully absorbed and focused on a challenging task or activity. It involves using one’s skills and abilities to their fullest extent.Analyzing Engagement involves identifying activities or tasks that lead to a state of flow and sustained focus. Encouraging individuals to pursue activities that match their skills and interests can enhance engagement and well-being.Engagement contributes to a sense of accomplishment and personal growth. It leads to a state of optimal performance and satisfaction, often described as “being in the zone.” It fosters creativity, motivation, and a sense of fulfillment.Organizations can promote engagement by aligning employees’ roles with their strengths and passions. Educational settings can design curricula that encourage student engagement in learning. Personal development involves pursuing activities that lead to flow states.– Designing work tasks that match employees’ skills and interests to increase engagement and job satisfaction. – Creating learning environments that challenge students while providing the necessary support to maintain engagement and motivation. – Encouraging individuals to identify their passions and hobbies to find activities that lead to a state of flow and engagement. – Developing goal-setting strategies to pursue projects or tasks that align with personal interests and skills.
RelationshipsRelationships emphasize the importance of social connections, including friendships, family, and community involvement. Positive relationships contribute to a sense of belonging and emotional support.Analyzing Relationships involves assessing the quality of social connections, nurturing existing relationships, and building new ones. Cultivating empathy, active listening, and effective communication skills is essential for maintaining positive relationships.Positive relationships provide emotional support, reduce feelings of loneliness, and enhance overall well-being. Strong social connections are associated with increased resilience and happiness. They offer a sense of belonging and create a support network during challenging times.The model highlights the significance of fostering positive relationships in various settings, such as workplaces, schools, and communities. It underscores the role of empathy, communication, and inclusivity in strengthening connections.– Implementing team-building activities in organizations to strengthen interpersonal relationships among employees. – Teaching students social and emotional skills to build positive relationships with peers and teachers. – Engaging in community service and volunteering to connect with like-minded individuals and create a sense of community. – Encouraging family bonding through shared activities and open communication to nurture strong familial relationships.
MeaningMeaning involves finding a sense of purpose, significance, or a deeper understanding of life’s meaning and values. It encompasses personal beliefs, values, and a sense of contributing to something greater than oneself.Analyzing Meaning entails exploring one’s core values, beliefs, and sense of purpose. Identifying activities or contributions that align with one’s values and provide a sense of fulfillment can enhance the perception of meaning in life.Finding meaning in life leads to a sense of fulfillment and a deeper understanding of one’s purpose. It provides motivation and resilience during challenging times. Meaningful activities often involve contributing to a greater cause or making a positive impact on others.Organizations and educators can support individuals in identifying their values and aligning their work or educational pursuits with a sense of purpose. Encouraging contributions to meaningful causes enhances well-being. Personal development often involves exploring one’s values and life purpose.– Implementing corporate social responsibility initiatives that allow employees to contribute to meaningful causes aligned with their values. – Incorporating values-based education in curricula to help students explore their beliefs and purpose in life. – Engaging in volunteer work or philanthropic activities to make a positive impact on society and find personal meaning. – Seeking careers or roles that align with personal values and provide a sense of purpose and fulfillment.
AccomplishmentAccomplishment refers to setting and achieving goals, experiencing a sense of mastery, and acknowledging one’s achievements. It involves a sense of competence and the ability to overcome challenges.Analyzing Accomplishment involves setting specific, achievable goals and tracking progress toward them. Recognizing and celebrating achievements, no matter how small, reinforces a sense of competence and accomplishment.Accomplishment contributes to self-esteem and confidence. It fosters a sense of agency and resilience, as individuals develop the belief that they can overcome challenges. Achieving goals provides a sense of satisfaction and reinforces the pursuit of future accomplishments.The model emphasizes the importance of goal setting, tracking progress, and celebrating achievements in personal and professional development. Educational institutions, workplaces, and personal development programs can incorporate these principles.– Establishing SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals to guide personal and professional growth. – Recognizing and celebrating milestones and achievements within organizations to boost employee morale and motivation. – Teaching students goal-setting techniques and time management skills to achieve academic and personal goals. – Encouraging individuals to maintain a record of accomplishments and celebrate their progress toward long-term objectives.

Understanding the PERMA model

In 1998, Seligman used his inaugural address as the new president of the American Psychological Association to call for a paradigm shift in psychology.

Until that point, the industry focused on relieving human suffering through the understanding and treatment of mental health disorders and maladaptive behaviors.

However, reducing the suffering of someone with poor mental health is not the same as wellbeing – after all, these individuals want to be able to thrive instead of merely existing.

In response, Seligman shifted the focus to what was good and positive in life with a simple model defining the elements of a meaningful existence.

This approach is now known as positive psychology, where the ultimate goal is to make life worth living by defining, quantifying, and creating wellbeing in individuals. 

The five elements of the PERMA model

To synthesize the positive psychology approach into a theory, Seligman defined five elements. 

Each element is intrinsically motivating and contributes to wellbeing, and each should be pursued for its own sake and measured independently.

Following is a look at the five elements which also comprise the PERMA acronym.

1 – Positive emotion (P) 

Positive emotions are a prime indicator of a flourishing individual and happily, these can be cultivated or learned.

Examples include joy, love, compassion, fulfillment, hope, interest, amusement, and gratitude. 

It’s important to note that positive emotion is more nuanced than simply feeling happy or flashing a great smile.

For example, a person may feel happy after accepting their tortured past while looking to the future with renewed hope.

Positive emotion in the workplace

In many companies, outward or flamboyant displays of positive emotion are discouraged.

But, according to psychologist Barbara L. Fredrickson, positive emotions are also moments that occur when the employee is free from anger, sadness, and anxiety. 

During the day, these moments can be encouraged by the employee making time to move their body with exercise, eat their favorite food for lunch, or enjoy the company of their co-workers in the sunshine.

2 – Engagement (E) 

Most people have experienced getting lost in a good book or movie and losing all sense of time.

Engagement is very similar to psychologist Mihaly Csikszentmihalyi’s concept of flow, where the individual lives in the present moment by focusing completely on a moderately difficult task. 

Engagement can be encouraged by the individual participating in activities they love or remaining in the present moment using a technique such as mindfulness.

Positive psychology also suggests spending time in nature and identifying one’s own character strengths.

Engagement in the workplace

Engagement in the workplace is a key driver of productivity and organizational performance since the employee’s motivation is not based on personal gain.

Companies with engaged employees tend to possess dynamic, skilled, and focused workforces that build their brands and make them desirable places to work.

The antithesis of engagement in the workplace is multi-tasking. Many believe this to be a skill one can cultivate, but in actual fact, multi-tasking places employees in a state of partial attention where the brain is constantly switching between tasks.

This process consumes energy and increases production of the stress hormone cortisol.

To avoid this scenario, employees should structure their workday to challenge (but not exhaust) their brains. Ideally, they’ll be engaged in a role equivalent to (or slightly exceeding) their capabilities without causing undue stress or anxiety.

3 – Positive relationships (R)

Human beings have a natural desire to connect with others and be part of a tribe, group, organization, school, or circle.

In fact, social connections have been found to play a role in preventing cognitive decline and increasing physical health.

Well-being can also be increased through the strengthening or maintaining of intimate relationships.

This may involve simple actions like sharing good news or responding enthusiastically to the presence of others.

Positive relationships in the workplace

Positive relationships in the workplace start with simple acts. Employees can practice active listening when others are speaking or perform acts of kindness like inviting a co-worker to lunch or buying them a coffee.

Choosing to eat in the lunchroom (instead of in a café or at home) is also an effective way to start the relationship building process.

Over time, these acts coalesce to form a positive company culture where mutual respect, collaboration, and empowerment are the norm.

This culture becomes apparent not only in informal contexts but also in formal contexts as part of meetings, projects, and so forth.

4 – Meaning (M)

Many psychologists believe happiness and wellbeing result from a creative and meaningful life, and not from the blind pursuit of material wealth and pleasure.

Seligman defined meaning as life purpose, where the individual devotes their life to something greater than themselves.

Meaning is guided by personal values and as a result, will be different for everyone.

For instance, an environmentalist may find meaning by volunteering at an organization that plants trees and conserves animals. Many others find meaning in their religious beliefs or professions.

Wherever meaning is found, however, those with a sense of purpose live longer and have greater life satisfaction.

Meaning in the workplace

Meaning is in many respects the responsibility of the employee. In other words, it is up to the indvidual to work in a role where they feel both valued and connected to something greater than themselves. 

To sustain meaning in the workplace, some helpful questions include:

  • How does my work connect to the greater good?
  • What difference does my work make? 
  • How can I measure this difference?
  • What can I do to support others in this area?

Note that everyone will have a different idea of a meaningful role and to find it, there is no requirement that one needs to work at Tesla or Apple.

Meaning to one person may be sitting on a local committee, while for another, it could be the establishment of an employee-resource group (ERG) for minorities.

5 – Accomplishment (A) 

The PERMA model suggests a sense of accomplishment results when individual works toward their goals and achieves mastery, competence, or success. 

Accomplishment should be pursued for its own sake and should not be seen as a means to an end.

Indeed, many individuals will find achieving their goals more satisfying because of the sometimes unpleasant process of working toward something.

Goals can be set in any context, including in the workplace, on the sports field, or in the development of a craft, hobby, or interest.

Accomplishment in the workplace

In the workplace, accomplishment is about autonomy and a sense that one can capably perform what is asked of them.

Accomplishment is most often associated with a promotion or bonus, but in a distracted world, it is also important for employees to “win the day”.

This starts with structuring the workday to capitalize on the finite amount of mental energy we all possess. This means complex tasks that require deep thinking should be tackled in the morning with menial tasks such as checking email left for the afternoon.

Longer term, employees should establish clear annual objectives and document their progress toward them periodically. When objectives are reached, they should be celebrated and this also applies to the achievements of others. 

Celebration in particular is an effective way to reframe an arduous project or period of toil as one that fosters personal and professional development. 

Perma model advantages and disadvantages

Advantages

The Perma model is very effective framework as it helps reframe the psychological status of an individual, and instead of focusing on the illness, it focuses on the positive side.

As it incentivizes a positive emotional state through the use of a few elements, from positive emotion to accomplishment, the Perma model can be useful to reframe problems into positive challenges.

Especially in a business environment that can be a critical skill.

Disadvantages

The main issue of the Perma model, while it helps reframe problem into positive challenges, enabling business people to find solutions.

The Perma model doesn’t have a set of actionable steps in order to execute on this psychological reframe.

This is the main drawback of the Perma model. It tells you how to reframe a problem and get into a more positive state of mind, to tackle challenges.

But it stops there. It doesn’t give you actionable insights on how to implement these steps.

When to Use the PERMA Model

Personal Development:

  • Self-Improvement and Growth: Useful for individuals seeking to enhance their personal well-being and happiness.
  • Resilience Building: Can help in developing resilience and a more positive outlook on life.

Organizational Settings:

  • Employee Well-being Programs: Ideal for developing workplace programs aimed at improving employee satisfaction and productivity.
  • Leadership Development: Helps leaders foster a positive work environment that promotes well-being.

Educational Environments:

  • Curriculum Development: Can be incorporated into educational programs to support student well-being and engagement.
  • Teacher Training: Useful for training educators in fostering positive classroom environments.

Mental Health and Therapy:

  • Complementary to Therapeutic Practices: Can be used alongside other therapeutic techniques to promote positive psychology.

How to Use the PERMA Model

Fostering Positive Emotions:

  • Encourage Positive Thinking: Promote practices that help individuals recognize and appreciate positive moments in their lives.
  • Resilience Against Negativity: Develop strategies to cope with and learn from negative emotions and experiences.

Cultivating Engagement:

  • Identify Engaging Activities: Encourage individuals to engage in activities that promote flow and deep involvement.
  • Work-Life Balance: Help individuals find balance between challenging tasks and leisure activities that bring engagement.

Building Relationships:

  • Social Skills Development: Foster communication and social skills to build and maintain healthy relationships.
  • Community Involvement: Encourage active participation in community or group activities.

Finding Meaning:

  • Personal Values Exploration: Assist individuals in exploring and defining their personal values and beliefs.
  • Purposeful Living: Encourage activities and goals that align with personal values to provide a sense of purpose.

Pursuing Accomplishment:

  • Goal Setting: Help individuals set and pursue realistic and meaningful goals.
  • Recognition of Achievements: Encourage acknowledgment and celebration of personal and professional achievements.

What to Expect from Implementing the PERMA Model

Enhanced Overall Well-being:

  • Increased Happiness: Likely to see improvements in general happiness and satisfaction with life.
  • Greater Resilience: Enhanced ability to cope with stress and adversity.

Improved Mental Health:

  • Reduction in Negative Emotions: Can lead to a decrease in feelings of depression and anxiety over time.
  • Increased Self-Efficacy: Greater sense of control and confidence in handling life’s challenges.

Challenges in Application:

  • Need for Consistency: Requires consistent effort to integrate and balance all aspects of the model in daily life.
  • Adaptation Over Time: Need to adapt and personalize the application of the model based on individual experiences and changes in life circumstances.

Impact on Social and Professional Life:

  • Improved Relationships: Potentially better and more fulfilling personal and professional relationships.
  • Enhanced Work Performance: Application in the workplace can lead to increased job satisfaction and productivity.

PERMA model case study: Google

To apply the PERMA model to a business context, let’s analyze a company that values employee well-being and has implemented various initiatives based on positive psychology research.

This company is Google.

Positive emotion

Google employees sometimes work long hours and even weekends, but this has not come at the expense of a work environment that fosters positive emotions. In fact, Google employs personnel whose sole job is to ensure that others are happy and productive.

Some of the perks of being a Google employee include:

  • Free breakfast, lunch, and dinner prepared by a chef.
  • Free health and dental coverage. Haircuts and dry cleaning are also offered at no cost.
  • Gyms, swimming pools, and subsidized massage services.
  • Video games, foosball, ping pong, nap pods, and
  • The ability to bring dogs to work. According to Forbes, there is even a section on dogs in the employee code of conduct.

Engagement

Aside from the many perks listed above, Google maintains employee engagement in a few different ways.

For one, the company’s so-called “20% time” is a way for employees to spend some of their on a project of their choice.

This enables them to enter Csikszentmihalyi’s fabled flow state and also reduces instances of burnout and staff turnover.

The company’s employee network dubbed “g2g” (Googler-to-Googler) is another way to increase engagement.

Essentially, the program is comprised of around 6,000 employees who volunteer some portion of their time to train and mentor others.

The program has been so successful because of its voluntary nature which increases engagement among trainers and trainees alike.

Relationships

Google’s somewhat flat organizational structure encourages all employees to share their opinions irrespective of rank or seniority level.

This taps into the innate human desire to connect and fit in with others and be members of a group.

Google also hires employees who are eager to collaborate, share ideas, and by extension, possess good communication skills.

What’s more, the company’s non-traditional meeting space model awards teams a “space budget” where they can set up a modular meeting area in a location of their choosing. 

Each module features sound-proof wood panels, privacy glass, and a door to ensure employees are not distracted and can build the sort of collaborative relationships that drive Google forward.

Meaning

For employees looking for meaning in their work, there could scarcely be a better company to work for than Google. The company’s moonshot factory works on radical new tech to solve some of the world’s most wicked problems. 

For those who are more interested in philanthropy or the environment, there are numerous opportunities available at Google.org and Google Sustainability respectively.

Accomplishment

Accomplishment is related to meaning in that many employees work on difficult problems and then experience immense satisfaction when a project concludes or a solution is found. 

Google employees are rewarded for their efforts in different ways. Under a peer-to-peer bonus program, employees can recognize their peers for less obvious contributions that may escape the attention of leaders. One oft-cited example of a reward is a massage voucher.

For more substantial efforts or exemplary performance, employees are rewarded with experiences such as dinner for two or even international travel.

Google switched to awarding employees in this way after it found that cash incentives caused jealousy, resentment, and low motivation among employees.

Key takeaways

  • The PERMA model is a framework for happiness and well-being based on positive psychology. It was developed by American psychologist and educator Martin Seligman.
  • Fundamental to the PERMA model is positive psychology, a relatively new domain in psychology involving the scientific study of what makes life most worth living. Positive psychology differs from traditional psychology, which tends to focus on mental illness with and maladaptive behavior.
  • The PERMA model is comprised of five elements: positive emotion, engagement, positive relationships, meaning, and accomplishment. Each element contributes to well-being, is pursued for its own sake, and is defined and measured independently of other elements.

Key Highlights

  • Introduction of the PERMA Model:
    • The PERMA model was developed by psychologist Martin Seligman as a framework for happiness and well-being based on positive psychology.
    • The model emphasizes five elements that contribute to a meaningful existence: positive emotion, engagement, positive relationships, meaning, and accomplishment.
  • Shift to Positive Psychology:
    • In 1998, Martin Seligman advocated for a shift in psychology’s focus from relieving mental health disorders to promoting well-being and positivity in life.
    • The traditional approach focused on addressing mental illness, while positive psychology aimed to enhance individuals’ ability to thrive and lead fulfilling lives.
  • Five Elements of the PERMA Model:
    • Positive Emotion (P): Cultivation of positive emotions like joy, love, compassion, and gratitude that contribute to overall well-being.
    • Engagement (E): Achieving a state of flow by focusing fully on a task, leading to a sense of absorption and present moment awareness.
    • Positive Relationships (R): Building social connections and meaningful relationships that foster well-being and contribute to physical health.
    • Meaning (M): Pursuing a sense of purpose and devotion to something greater than oneself, often guided by personal values and beliefs.
    • Accomplishment (A): Achieving mastery, competence, and success in tasks and goals, leading to a sense of accomplishment and satisfaction.
  • Independent Pursuit and Measurement:
    • Each element within the PERMA model is intrinsically motivating and should be pursued for its own sake, rather than as a means to an end.
    • These elements can be measured independently to assess an individual’s well-being in each area.
  • Application in Different Contexts:
    • The PERMA model has applicability in various contexts, including personal life, work, and organizations.
    • Positive emotions, engagement, relationships, meaning, and accomplishment contribute to holistic well-being in different spheres.
  • Application to Google:
    • The PERMA model can be applied to analyze how a company like Google prioritizes employee well-being.
    • Google’s initiatives, such as providing perks, fostering engagement through projects like “20% time,” promoting positive relationships through collaboration, offering meaningful work on significant challenges, and recognizing accomplishments, align with the PERMA model’s elements.
  • Advantages and Disadvantages:
    • The PERMA model reframes psychological states, emphasizing positivity and personal growth.
    • Advantages include its ability to reframe problems, promote positive emotions, and inspire resilience.
    • A drawback is the lack of actionable steps for implementing the model’s principles.
  • Key Takeaways:
    • The PERMA model focuses on enhancing well-being and happiness by emphasizing positive emotions, engagement, relationships, meaning, and accomplishment.
    • Positive psychology, the foundation of the model, shifts from addressing mental illness to promoting thriving and fulfillment.
    • The model’s elements can be pursued independently and measured to assess well-being in different aspects of life and work.

What are the five elements of the PERMA model?

What are the advantages of the PERMA model?

The Perma model helps companies to reframe the psychology of individuals to focus on the positive side, incentivizing a positive emotional state through the use of a few elements, from positive emotion to accomplishment.

What are the disadvantages of the PERMA model?

The main issue of the Perma model, while it helps reframe problems into positive challenges, enabling business people to find solutions, it doesn’t have a set of actionable steps to execute this psychological reframe.  

Connected Business Concepts

Convergent vs. Divergent Thinking

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Convergent thinking occurs when the solution to a problem can be found by applying established rules and logical reasoning. Whereas divergent thinking is an unstructured problem-solving method where participants are encouraged to develop many innovative ideas or solutions to a given problem. Where convergent thinking might work for larger, mature organizations where divergent thinking is more suited for startups and innovative companies.

Critical Thinking

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Critical thinking involves analyzing observations, facts, evidence, and arguments to form a judgment about what someone reads, hears, says, or writes.

Systems Thinking

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Systems thinking is a holistic means of investigating the factors and interactions that could contribute to a potential outcome. It is about thinking non-linearly, and understanding the second-order consequences of actions and input into the system.

Vertical Thinking

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Vertical thinking, on the other hand, is a problem-solving approach that favors a selective, analytical, structured, and sequential mindset. The focus of vertical thinking is to arrive at a reasoned, defined solution.

Maslow’s Hammer

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Maslow’s Hammer, otherwise known as the law of the instrument or the Einstellung effect, is a cognitive bias causing an over-reliance on a familiar tool. This can be expressed as the tendency to overuse a known tool (perhaps a hammer) to solve issues that might require a different tool. This problem is persistent in the business world where perhaps known tools or frameworks might be used in the wrong context (like business plans used as planning tools instead of only investors’ pitches).

Peter Principle

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The Peter Principle was first described by Canadian sociologist Lawrence J. Peter in his 1969 book The Peter Principle. The Peter Principle states that people are continually promoted within an organization until they reach their level of incompetence.

First-Principles Thinking

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First-principles thinking – sometimes called reasoning from first principles – is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.

Ladder Of Inference

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The ladder of inference is a conscious or subconscious thinking process where an individual moves from a fact to a decision or action. The ladder of inference was created by academic Chris Argyris to illustrate how people form and then use mental models to make decisions.

Six Thinking Hats Model

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The Six Thinking Hats model was created by psychologist Edward de Bono in 1986, who noted that personality type was a key driver of how people approached problem-solving. For example, optimists view situations differently from pessimists. Analytical individuals may generate ideas that a more emotional person would not, and vice versa.

Second-Order Thinking

second-order-thinking
Second-order thinking is a means of assessing the implications of our decisions by considering future consequences. Second-order thinking is a mental model that considers all future possibilities. It encourages individuals to think outside of the box so that they can prepare for every and eventuality. It also discourages the tendency for individuals to default to the most obvious choice.

Lateral Thinking

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Lateral thinking is a business strategy that involves approaching a problem from a different direction. The strategy attempts to remove traditionally formulaic and routine approaches to problem-solving by advocating creative thinking, therefore finding unconventional ways to solve a known problem. This sort of non-linear approach to problem-solving, can at times, create a big impact.

Moonshot Thinking

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Moonshot thinking is an approach to innovation, and it can be applied to business or any other discipline where you target at least 10X goals. That shifts the mindset, and it empowers a team of people to look for unconventional solutions, thus starting from first principles, by leveraging on fast-paced experimentation.

Biases

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The concept of cognitive biases was introduced and popularized by the work of Amos Tversky and Daniel Kahneman in 1972. Biases are seen as systematic errors and flaws that make humans deviate from the standards of rationality, thus making us inept at making good decisions under uncertainty.

Bounded Rationality

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Bounded rationality is a concept attributed to Herbert Simon, an economist and political scientist interested in decision-making and how we make decisions in the real world. In fact, he believed that rather than optimizing (which was the mainstream view in the past decades) humans follow what he called satisficing.

Dunning-Kruger Effect

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The Dunning-Kruger effect describes a cognitive bias where people with low ability in a task overestimate their ability to perform that task well. Consumers or businesses that do not possess the requisite knowledge make bad decisions. What’s more, knowledge gaps prevent the person or business from seeing their mistakes.

Occam’s Razor

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Occam’s Razor states that one should not increase (beyond reason) the number of entities required to explain anything. All things being equal, the simplest solution is often the best one. The principle is attributed to 14th-century English theologian William of Ockham.

Mandela Effect

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The Mandela effect is a phenomenon where a large group of people remembers an event differently from how it occurred. The Mandela effect was first described in relation to Fiona Broome, who believed that former South African President Nelson Mandela died in prison during the 1980s. While Mandela was released from prison in 1990 and died 23 years later, Broome remembered news coverage of his death in prison and even a speech from his widow. Of course, neither event occurred in reality. But Broome was later to discover that she was not the only one with the same recollection of events.

Crowding-Out Effect

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The crowding-out effect occurs when public sector spending reduces spending in the private sector.

Bandwagon Effect

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The bandwagon effect tells us that the more a belief or idea has been adopted by more people within a group, the more the individual adoption of that idea might increase within the same group. This is the psychological effect that leads to herd mentality. What is marketing can be associated with social proof.

Read Next: BiasesBounded RationalityMandela EffectDunning-Kruger

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